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Notice of Less Favorable Terms

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  • #33621
    mbmills
    Participant

    Our consumer loan application has a “Notice of Less Favorable Terms” section on it that says the following: The terms upon which we have approved your credit application may be materially less favorable than most favorable terms available to a substantial proportion of consumers making similar application to us. The terms offered to you based in whole or in part on information obtained from the consumer-reporting agency listed below. You have the right under the Fair Credit Reporting Act to know the information contained in your credit file at the consumer-reporting agency. You also have a right to a free copy of your report from the reporting agency. If you request it no later than 60 days after you receive this notice. (This language is followed by a listing of TransUnion, Experian, and Equifax with a checkbox preceding each.)

    We have always provided the Credit Score Disclosure Exception (Model Form H-3/H-4/H-5) so I’m confused as to why the above language is on the application. I am planning to have it removed, but just wanted to confirm that this is an appropriate action.

    #33624
    pcorder
    Participant

    RE:

    You also have a right to a free copy of your report from the reporting agency. If you request it no later than 60 days after you receive this notice.

    We provide the credit score and negative influencing factors on the adverse action notice, but applicants have always had the opportunity to obtain a free copy of the full credit report, when adverse action is taken. That may be what the statement on your consumer app is in reference to. But generally, it’s stated on the AAN. You might want to verify it’s on your AAN.

    The consumer also can obtain a free credit report from each of the reporting agencies annually @ annualfreecreditreport.com.

    Hope this helps!

    #33625
    rcooper
    Keymaster

    This does seem strange to be included in the application as it seems it is directly taken from the risk-based pricing disclosure requirements. And it is strange that it is an application for credit yet it says “…we have approved your credit…” I’d be curious to find out when and why it was added. Do you get your applications from a forms vendor and did they add it or did the bank manually add it in. If you are providng the RBP exception notices that should meet your requirements for those rules.

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